Lawmakers say bipartisan move to change NJ’s ‘senior-freeze’ property-tax reimbursement program would help homeowners on fixed incomes and save on administrative costs

Members of the Assembly State Government Committee as they voted yesterday for a bill that would turn the state's "senior-freeze" property tax relief checks into a direct credit

For the last two decades, the state’s popular “senior-freeze” program has funded reimbursement checks for eligible seniors and disabled residents to help offset New Jersey’s ever-rising property tax bills. But now lawmakers want to turn those checks into a direct credit on property tax bills, saying the change could benefit both recipients and the state.

Under a bipartisan bill that was approved yesterday by the Assembly State Government Committee, the more than 160,000 New Jersey seniors and disabled residents who qualify for the senior-freeze program would see their tax relief begin to show up as a direct credit on third- and fourth-quarter property tax bills.

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Known officially as the Property Tax Reimbursement, the senior-freeze nickname comes from the program’s use of state-funded reimbursement checks to effectively freeze property tax bills each year for thousands of longtime New Jersey residents. To qualify for the program, which started in 1997, homeowners must be at least 65 years old or disabled, and be at least a 10-year resident of the state. They also have to be the owners of their residence for the past three years and be up to date on their property taxes.

Christie budget reduces senior-freeze and Homestead benefit

The change to the program that’s been proposed by lawmakers comes as the new budget Gov. Chris Christie has put forward for the state fiscal year that begins in July slightly reduces funding for both the senior-freeze program and the Homestead benefit — another popular state property tax relief program — even as the average New Jersey property tax bill increased by nearly $200 last year to a record-high of $8,549.

Christie’s budget proposal, meanwhile, would also keep in place a hold on a planned expansion of the senior-freeze program’s income limit that is supposed to help keep pace with inflation. Instead, the income limit has been stuck for the last several years at $70,000.

The sponsors of the legislation say changing the senior-freeze program into a direct credit on property tax bills will prevent those who currently receive reimbursement checks from being forced to cover the full cost of their property tax bills until they receive the checks, which typically start arriving in July each year. Turning the program into a direct credit will also save the state the costs associated with processing and mailing out the reimbursement checks, the sponsors said.

The Homestead benefit was converted from a rebate check into a direct credit on property tax bills by the Christie administration in 2011.

In all, Christie’s proposed spending plan for the 2018 fiscal year allocates just over $1 billion for direct property tax relief programs out of $35.5 billion in total spending. Included in that total is $200 million to cover senior-freeze reimbursement checks averaging $1,401 for 138,200 existing recipients, and checks averaging $219 for 25,100 expected newcomers to the program.

The sponsors of the bipartisan bill proposing to turn the senior-freeze checks into direct credits are hoping the change can go into effect for the current tax year. The bill passed the Assembly panel unanimously during a meeting yesterday.

‘…modernizing the process’

“It doesn’t make sense to force homeowners struggling on fixed incomes to make tax payments they can hardly afford only to reimburse them down the road,” said Assemblyman Ron Dancer (R-Ocean). “By modernizing the process, we can create direct savings for the taxpayers and the state saves money with reduced administrative costs,” said Dancer, a primary sponsor of the bill.

“It can be a burden for many taxpayers that are eligible for the senior-freeze program to pay their taxes and wait for a reimbursement on the back end,” said Assemblyman Troy Singleton (D-Burlington).

“This way, the credit is applied directly to their property tax bill,” said Singleton, who is also a primary sponsor of the bill. “We think this will be something that will help our seniors to be able to stay in their homes and have the rebate be effective in that manner.”

It’s unclear exactly how much the state could save by making the change, or if there are any technical issues that would prevent it from being enacted if the measure ultimately makes it out of the Legislature and is endorsed by Christie. A spokesman for the state Department of Treasury cited the agency’s general policy of not commenting on any pending legislation when asked about the bill yesterday.

The measure’s advancement, meanwhile, comes as lawmakers are getting ready to launch the formal budget-review process with a series of legislative hearings that are scheduled to be held in the months leading up the June 30 deadline for a new budget that’s set in the state constitution. Singleton, the chairman of the Assembly State Government Committee, said after the meeting yesterday that he will use the budget process to try and convince the Christie administration to increase the current income-ceiling for the senior-freeze program.

The state law that created the program 20 years ago set up an income limit, but the limit was eventually supposed to rise annually with the cost of living, like Social Security benefits. Instead, the limit has been held flat at $70,000 for the past few years, using fine print inserted into the state budget through a practice authorized by the state constitution’s balanced-budget clause.

Keeping the income limit at $70,000 each year helps the state save money without having to announce any actual changes to the program. If allowed to go through again this year, the income ceiling that is supposed to be set at $87,007 for the 2016 tax year will instead remain stuck at $70,000.

Christie has also maintained flat income-eligibility limits for the Homestead program, which provides property tax relief to nearly 600,000 New Jersey homeowners. Senior and disabled homeowners who make up to $150,000 — including those who also qualify for the senior freeze— are generally eligible for Homestead credits. All other homeowners who make up to $75,000 are also eligible for the credit, which will average $511 for seniors and the disabled, and $397 for other homeowners under the fiscal year 2018 spending plan.